Welcome back to the show. Today I'm joined by Erbil Karaman, co-founder of Huma Finance. It's a protocol building income back DeFi. ah In this episode, we're gonna talk all about Huma Finance and what they're up to and welcome to the show, Erbil. Thank you so much for having me, Peter. Let's begin with the positioning um of Huma and then we'll get into the problem that Huma is trying to solve. But I'm intrigued by the positioning on the website. It says the first PayFi network, Huma accelerates global payments with instant access to liquidity anywhere, anytime. Help us unpack what that means. Yes, so PayFi is a relatively new term that was coined by the president of Solana Foundation, Lily Liu, as a way to describe the technologies that can accelerate the movement of money around the world using blockchains, stable coins, and programmable liquidity. These things used to be provided by traditional financial institutions like banks, but when you want to move money across the globe, would go through correspondence banks, dollar only, traveled through certain routes, even things like trade finance, card payments, they all have designated routes and rails. And those things haven't really evolved in the past maybe 50, 60 years, if not more than that. And now with the introduction of stable coins. that can work on blockchain. And instead of liquidity coming from banks, it's coming from DeFi, it's coming from on-chain sources. You can reconfigure everything and make money move faster and solve more problems. So let me give you a few examples. The probably most common everyday payment finance use case is credit cards, right? You don't necessarily have the cash in your pocket, but you have a card and there's an institution. that basically finances your payment. And the moment you swipe it, that is the transaction now is a transaction that the merchant has on their end. But it still takes three to five days, sometimes 10, 15 days for the merchant to access their capital. So one solution domain for PayFi is actually making Civil Coin Bag cards work in a way that merchants get access to their capital right away. And this is one of our growing use cases. Another use case is remittances, cross-border payments. People have to send money home all the time. I'm from Turkey. I have my family in Turkey. I send money home all the time. And remittances today require companies like Western Union Moneygram to keep thousands of accounts all around the world. all pre-funded, filled with capital. This is considered to be 4 trillion dollars locked in these bank accounts just to be able to settle the money wherever it's going to. So with the introduction of PayFi systems, all these remittance companies don't need to keep these pre-fund accounts, 2.5 million dollars all around the world in bank accounts. The moment money comes in, they can press a button, get instant liquidity with a stablecoin and settle with their basically destination partners in stable coins. This is basically our biggest use case, about 90 % of our network volume, more than $6 billion is basically these cross border payment use cases. There are merchant payment use cases like Amazon sells their goods in the US, but all the merchants they need to pay out money to are in Asia. And the problem is there's no banking system that can get the money in the US to Asia in time. because we have to go from US to UK bank account, do FX transactions, and then from UK to uh maybe Hong Kong, Singapore, from there to regional banks and distributors. just takes forever. So we integrated with GeoSwift, one of their biggest Asia payout partners. So now Amazon can press a button in the US, and money shows up in accounts in Asia, same day, if not close to real time. These are the type of solutions and use cases the PayFind ecosystem provides. And we're so happy that more and more large companies and institutions like the visas and mastercards of the world are joining this moment. Yeah, there's been a lot of, I know one of the main use cases that a lot of people throughout, you know, since 2016, 2017 have talked about for crypto is cross border payments. And it feels like now is the right time where, you know, stable coins are now becoming kind of ubiquitous in crypto. And it's becoming more and more accepted in TradFi that it feels like now's the right time. I wonder if it would help be helpful to maybe walk the audience through the current process of if you were to send money to your family in Turkey, like what are all the process steps from, you know, from the initiation all the way to last mile to where your mom receives the money on her end. And maybe contrast that with, you know, with uh Uma Finance and the types of things that it aims to. the steps it removes and the time it saves, all of that. Awesome. This is a great use case because it's actually one of the most complicated use cases, even though to the user, it feels like, you know, they just need to open an app and press a button, but there are many, many intermediaries involved. So let's say I want to send money home. I want to send it through Western Union. So first and foremost, I need to find either a Western Union agent, right? Some kiosk I can walk into, or I need to go to their online store and initiate my payment from there. And first and foremost, when I walk into an agent or when I do this transaction on the website, my money goes into a safeguard account, basically it's the collections account, right? So making sure that the money is in the Western Union system. And the problem actually starts after they get this money in the collections or safeguard account because now then to figure out who is going to actually distribute my money and are they going to put intermediaries in between for that money to be distributed. uh This is region by region is different, but most likely they will have a major partner helping them with having as many kiosks and distribution uh points in Turkey and all of those. need to be pre-funded, which means whichever the agent in between needs to make sure they have more capital than I'm putting into the system already in Turkey for them to be able to make the disbursement. What happens in reality is a lot of times some of these branches and agents actually do not have money. This is a common complaint that I hear in Turkey quite a bit. Turkey has a, you know, liquid the crunch a lot of times. And that means you can walk into a Western Union branch and they can say, I'm sorry, I don't have dollars, come back tomorrow. It's easier when you send Turkish Diras, but then the loss in terms of ethics rates and stuff happens to be more. And by the time basically my mom walks into a store, they will need to make sure that there's enough, you know, liquidity in the pre-funded bank accounts and they can disperse the capital to my mom. And Because of all of these intermediary steps and Western Union needing to constantly monitor how much money is left in different parts of the liquidity hubs, and they need to replenish those accounts constantly, there is a huge cost of treasury operations and basically money being borrowed sometimes from their partners on the delivery end or money brought from their banking partners in Turkey. So there's a lot of cost built into it. And at end of the day, I end up paying 4 or 5%, sometimes more than that, for just sending money across the borders, which should be way easier than that. So in new model, if Western Union operates this on the Pay-In-Find network, what happens is, first of all, Western Union do not need to keep any capital whatsoever in the distribution locations. All they have to do is integrate the system so that when the money comes in, and I, let's say I put a hundred dollars into the kiosk, they are able to go into the DeFi liquid, the pool, the stable coin liquid, pool, which is a global pool, withdraw not just a hundred dollars, but at the time they say they have $1 million worth of, you know, obligations, withdraw that $1 million and immediately settle. with their distribution partners in stable coins. And the moment the distribution partner has a stable coin, they have two choices, either to disperse that in the course of their choice, because they already got the money, right? They are safe, they got their money, or actually disperse as a stable coin into a wallet. This is the case for, for example, Moneygram. If you're using Moneygram, Moneygram wallets accept USDC, but the user sees it as USD. because from a user's perspective it doesn't really matter if it's USD or USDC. So you have no capital lagging, no capital inefficiency, and much lower cost because you don't need to have all these intermediaries in between doing all these treasure operations and constantly figuring out if they have enough liquidity. That sounds really fascinating. I'm curious about the liquidity piece. So in the old model, uh Western Union or any of these companies, need to have, uh each of these intermediaries need to have over collateralized liquidity. um But how does Huma Finance solve that problem? uh So we constantly borrow capital from DeFi. So we have institutional DeFi users who are seeking returns on their USDC and we have retail through our permissions protocol retail DeFi users who are also seeking yield on their USDC. So we're constantly borrowing this capital into the system. with 90 % of a yield on the USDC. So this is kind of like you're putting the capital into a CD type of structure or like a yield instrument. And we use this capital all the time for all of our payment partners to utilize whenever they have money coming in from one place and they have to make a distribution in another place. And they're constantly using this capital. We have close to 100 % utilization rate. on our DeFi liquidity pools on USDC. And they are paying us five to eight basis points every business day. They are using this liquidity, which means we're able to pass some of that revenue to the depositors of USDC on our pools. And they are making 90 % percent on their USDC. They're happy. Very low risk. So far, we had $7.6 billion of these transactions with $0 in credit default. And our partners are happy because they're able to grow their system in more capital efficient ways. And there's always capital readily available for them whenever they want to increase their capacity. This is really fascinating. so the old world, there are multiple intermediaries depending on probably geography or location. um But let's just say there's more than let's say two. There's the beginning and then the end and then probably a couple intermediaries in between. And I don't know exactly what that looks like. And collateral and the liquidity, each of these intermediaries need to have over collateralized liquidity so that they can meet the needs of the money transmission all the way from beginning to end. And all of that capital is locked up. It's not earning yield. It's capital inefficient. In the new world with Huma Finance, now they have access to capital that they can borrow at a competitive rate so that they don't need to lock up their capital, which is a really big benefit uh for people that need to send money, right? And how many steps How many steps, I guess, in, I'm kind of stuck on the process because that's one of the worlds I used to work in is eliminating process steps. And it's a huge value add to eliminate process steps. It saves time and reduces complexity. What does that part look like? uh Old world versus Uma. Yeah, actually you mentioned something I want to comment on before I jump into the process part because I'm a nerd so I can go as deep as you want. But you're so right that in the old world, all of the capital was locked in a very ineffective way, not earning anything. And that's not acceptable for any traditional management of any company, any large financial institution today. So this is a very ineffective way of running a financial institution. But more so, in the old world, banks have been the number one liquidity provider in all of these systems. And where does that liquidity come from to banks? It comes from you, it comes from me. And in return, because we are trusting the bank with our deposits, in return, the bank was giving us single digits, if not less than that, in terms of returns. So banks are actually making a lot of money on our money. But we're getting a very small return on our deposit. So this is one of the main reasons banks are terrified of stable coins to certain extent, because they're losing the cheapest source of capital, which has been the retail and their other partners that keep deposits for not asking for much from the bank. And now with a new system, a stable coin holder can actually access different yield opportunities because they become a part of let's say, global decentralized bank, right? And they can decide which use cases they want to put their capital towards. So that to me is a big unlock and a big shift from where we were. In terms of process, um Certain corridors, we call it, corridors means, you know, let's say I want to send money to Turkey, US-Turkey is a corridor, US-Mexico is one of the biggest corridors in our system. know, UK to Africa is a big corridor, UK to India, you know, Pakistan is a big corridor, Singapore to Philippines is a big corridor. So these are like corridors. So each corridor has their own. systems built in, they're all kind of like ecosystem built in and different players, you know, playing different roles, including the financial institutions on both ends. So usually there will be at least eight, nine different steps these companies have to go through. And this actually includes things like negotiating FX rates, right? So if I'm going to send money to Turkey, I need to make sure that if the dispersal is happening in Turkish tiras, I'm not taking too much risk. on the rates, I need to lock in the rates. there's a lot of actually phone calls. This is crazy how manual this world is. These companies actually have a lot of phone traffic every single day, just locking in FX rates because they want to make sure they're not exposed on the end. um And you have all these intermediaries playing different roles, eight, nine different steps just to get the capital across the board. And lot of times they fail. They fail, especially on holidays. Why? Because banks are closed on holidays and financial systems don't actually work on holidays. can't uh recycle capital, recycle your treasury on holidays. And these are the reasons why I think to your point, they're shifting very quickly to stable coin based systems because it saves them a lot of headache. saves them a lot of processes cut out of the system. Yeah. I appreciate you sharing about the corridors. I'm thinking, I'm familiar a little bit with the US to Philippines corridor. And I know that on the other end, end of the Philippines end, um a lot of the money is uh received through pawn shops. um There's a famous pawn shop called L'Olier, which is a French pawn shop, French Filipino pawn shop. And there's like a Lulier kind of outlet or store in multiple of them in every city. And so it's very accessible. It's kind like the 7-Eleven in the Philippines. m I wonder, I can see the huge benefit, right? I wonder from a BD perspective or business development perspective, do you have to work with not just the initiation and all the steps in between, but What would that look like with Uma Finance working with like the recipient end where, you know, your mom picks up money in Turkey or my mom in the Philippines? um What does that end look like? And do you have to work with those? I don't even know what it's called, wherever the last mile is or where the money ends up. Totally. Great, great question. sometimes we tend to pick large global partners. The reason is, it's much simpler to just like, let's say go and work with Lulu Finance, which is the largest cross border payments player in UAE. And they cover so many corridors because UAE is such central to Asia, Middle East, you know, they settle a lot of different corridors. So by working with them, we cover a lot of different use cases. By working with some other big remittance companies that are global, we cover a lot of ground. But sometimes for certain use cases, like you mentioned, Philippines, we're very close friends with P-dex, one of the leading fintechs over there. Because you can't always solve the problem from a central platform integration perspective. Sometimes you need to go and find your last mile solution as well. And sometimes they say, for example, the Amazon use case, right? The Amazon use case cannot be just sold by integrating with one party. in that solution, we had four different solutions come together. So we had Amazon, their uh payout partner, GeoSwift, GeoSwift's solution partner. And then we had RD Technologies, is a digital neo bank in Hong Kong that can actually take in uh stable coins and settle with stable coins. So we had a lot of different solution partners coming together to just provide one solution to Amazon's merchants in Asia. And it has been so far very solution architecture heavy. So every single use case we have experts in different domains go in and just like... try to stitch things together. The good news is things are changing. So about a month ago, Circle has announced that, know, Huma is going to be the first liquidity and credit service provider embedded into the Circle's payments network. What does it mean? Everybody connected to that network, all of the beneficiaries, right, the senders and receivers, they will be able to tap into our solution. without us requiring to connect all of that ourselves. And we're building similar integrations and we call it empathy equity, similar solutions into other new age payment networks. So we just become a third party provided as very scalable. And anybody who is part of those networks can just like tap into our solution and things are orchestrated within the platform without us needing to stitch everything together. That's amazing. I know Circle is one of the investors in Uma Finance, um which brings me to another question. So Robot Ventures, uh Circle, uh Hashkey, um Uma Finance has a lot of really big name investors. um From their perspective, what did they see in Uma Finance that led them to write that check? Yeah, we have actually, you're right, more than 60 investors, uh three banks, a lot of big names in crypto, original names. Actually Circle was very instrumental in building Huma. And I would almost say Jeremy himself, the CEO of Circle played a big role in one convincing me personally to go all into the world of stable coins. uh He and I was talking about, you know, me potentially joining Circle back in the days to help them basically become a public company. I had an experience from Facebook earlier and Lyft as I was there before companies became public and knew exactly that whole process and how the companies can scale into a public company. So as we're talking about that, he was convincing me in the critical... um aspects of stable coins, how it's going to change trade and cross border payments and even monetary policies. He convinced me so well that I decided not to join Circle as one of the uh executive team members, but start Huma as a solution provider to this ecosystem. And uh obviously they became one of our first investors, uh very strategic in terms of our hand in hand working together, but also Most of the Humas funding team came from a US fintech company called Ernin, where we were building some of the most innovative credit solutions, uh mostly backed by AI. And we had so much conviction that the future fintechs will have to build their solutions, not on traditional financial rails, but they have to use new rails. Because at Ernin, our previous fintech, we had challenges solving problems over the weekends. We had challenges solving problems with bank integrations because they broke all the time and they didn't work as well as we wanted them to work. We had challenges with building more advanced card systems that could update balances almost in a real-time manner and could actually have defensive mechanisms to not let people incur more debt than they need to. So all of these things were at the time blocked. by the inefficiencies and the incapabilities of the existing systems. And we said, OK, future is going to be built on a different rail, different structure. And that's kind of what gave us the conviction. And people who knew us obviously from our past life, they had, I think, no option other than pedigonas. And that's always a good problem to have, right? What I love about Ooma Finance is you're attacking an inefficiency that is well-known. It's chronic across all systems and corridors. And it's something that people have talked about for a long time, but you guys are actually now doing it. As I think about the product, you've got the retail piece. These are actual users that need to send money or receive money. And then there's the B2B integration piece where Huma Finance needs to integrate potentially with some of the receiver side, the sender side, and then maybe any intermediaries in between if needed. uh But I think there's also another piece where these liquidity pools, um there also is, feels like an LP piece where you need to convince uh or not convince, maybe do some marketing so that depositors will deposit uh monies into this liquidity pool so that they can earn a yield. um And then that money is then used to provide liquidity to the payment network or to senders and receivers. Is that right? Is that the three pieces? That's a really, really complicated business that you guys are building. uh I guess, how do you attack something like that with kind of three major moving parts. uh It's a very good question. Actually, as an angel investor, I usually recommend people not to take on problems where they have to solve every single part of the equation. Just know, I tell them focus on one leg. And in reality, we started by focusing on only one part of it, uh which is just provide infrastructure to this existing players and intermediaries. and nothing else, but we quickly realized that the challenge that they were having was necessarily on infrastructure side only. We don't have a stable coin treasury. We cannot operate tomorrow in something that we have not operated with before. And uh this lack of stable coin treasury and stable coin liquidity in the market and nonexistence of any banking relationship, these things are changing right now. The Genius Act, I think things are looking very different. even six months ago, people were basically saying, OK, unless I have some stable coin liquid that can tap into, it's very hard for me to switch from this fiat system that I built over the years to this. And we realized, OK, we cannot solve just this problem. We need to solve this problem as well. And we started building. certain relationships and this is the reason we brought certain investors to our series A. They had a lot of capacity to provide some of the institutional stable coin liquidity, but also we decided to launch on Solana earlier this year around April. And that was mainly driven by accessing a much wider audience. that is going to be looking at a relatively stable, consistent yield source for the USDC. And we've been right because we had close to 100,000 depositors on our permissionless product. These are all LPs, right, seeking yield on their USDC. And it has been scaling very well. And then recently Binance wallet integrated our um LP solution as well. if you're a Binance Vault user, if you have USTC in your wallet, can see Huma is one of the options you can choose to keep your USTC working for you and generating yield for you. So all of these integrations we are posting right now are giving us access to a wider audience, which means a deeper, know, the Kuta pool. and a larger LP ecosystem. So we're going to continue to integrate with other venues. We just launched integration with Jupiter land where they have $1.5 billion in digital assets lending capacity. And we are one of the fastest growing yield opportunities on Jupiter land. So those integrations will continue to, I think, scale that part. And I'm not too concerned because we also have investment banks that we're working with to get know, larger sums of capital that are lacked in for five years in our systems. That gives us a lot of predictability. And we're more focused on making sure that um the infrastructure is also well embedded into Circle Payment Network and other type of large payment networks and credit card networks so that as this scales, this scales as well. If you can achieve it, any company that has achieved scaling both out of the marketplace, like Amazon, has became irreplaceable. So that's kind of like our... Yeah. So you've addressed the liquidity pool LP side and that's growing and doing really, really well. On the retail side, what does the go-to-market look like there? Because it feels like you're competing against some very big names like the Western Union, MoneyGram, um or is competing against them maybe not the right way of thinking? Maybe they can even become customers of Huma Finance. How do you think about that side and the go-to-market? yeah, let me clarify this. So actually, we don't initiate any consumer payment. So we actually work with the remittance companies. All of them are clients of ours, right? All of those big cross-border payment remittance companies are clients of ours. We help them basically make their own payment infrastructure more efficient. and be able to utilize and capitalize the stable coins. So we are directly integrating with them. We're never competing on the consumer remittance use cases. It's always a solution provider to them. And it's usually hidden from the end user as well. Got it. that helps. um Forgive me for misunderstanding that piece. So MoneyGram and Western Union and others work with Huma Finance and Huma Finance becomes the payment rails for those remittance companies. that is that the crew? Okay, got name the names of the remittance companies that uh we are actually working with, but yes, majority of the uh large remittance companies uh basically working with them to provide the solution as an infrastructure and instead of competing with them. Yes. Got it. Is it like a white labeled uh kind of agreement where, um you know, that partnership or integration is kept private, but it's really Huma finance on the background? Yes, so all of that is, you know, for various different reasons are kept private. uh You can also think about part of the challenge being blockchains are not very privacy friendly, at least right now. A lot of transactions are traceable. And this is necessarily, I think, an easy thing to digest for some of these partners. So certain things are obfuscated for oh privacy reasons. uh But also for uh commercial uh reasons, might not want to be known exactly what they are using behind the scenes, just like most of them actually wouldn't necessarily tell the public what are their financial institutional partners and banking partners and stuff like that. Yeah, and that makes sense. um I just shared those names as an example to give me a kind of a more concrete idea. Let's talk about the privacy. public names we talked about like Lulu Finance I mentioned because we did PR together and we kind of are part of the circle ecosystem together. But yes, those are well-known names. You mentioned privacy and that's been one of the big kind of question marks for, think for me and for a lot of people in crypto. It's the, know, TradFi in uh crypto and DeFi is a big improvement on many areas of TradFi except for privacy, I think, because TradFi is kind of does privacy by default, whereas crypto is kind of like transparent and open by default. And so we have to make an effort to make things private. there's, there's a lot of. uh effort uh and projects focus on that right now. ah What is Huma, I guess, what is your approach to privacy and what are you guys thinking in terms of providing more privacy for users of the Huma payment rails? Yes, this is a great question. So personally, you know, I believe observability is a very high value add feature of blockchains because you don't have it in tradefi and it helps you trace where the money is at all times. observability is a very important feature. Verifiability is a very important feature of blockchains. But I think full transparency is only a consequence of the original Bitcoin design. It doesn't have to be that way. And I think we are seeing major shifts at this point uh with the application domain of zero knowledge proofs, know, I'm growing and becoming more mature. We're seeing major shifts and I think it is critical. I actually believe this is an existential um matter for not just blockchain, but humanity in general. Privacy is is one of the most critical elements that we need to achieve. And it is, to me, non-negotiable. And in our case, we built our systems where nobody can trace anything back to anybody, not even to the name of an institution that's working with us, by just looking at transition on our system. We built it in a way that is impossible to do. Even us, ourselves, uh we built our systems in a zero-knowledge way, nobody working at Huma or our regular entity ARV can say, this transaction originated from this partner, probably for this, they cannot say that. But that doesn't necessarily mean we don't have observability. We're regulated, uh and we have to prove that there is no... uh money laundering or terrorist transaction type of activity on our system. So we still have observability systems that can prove that none of such activity has been taking place on our system. So I think this is how I see the new age uh stablecoin solutions should approach the matter. uh Make sure observability is there and verifiability is there. uh Do not blend yourself into the horizons of privacy and it's just going to turn ugly from there on. Yeah. Within the Huma Finance uh Network, what role does KYC or KYB play? um I know you work with the specific money remittance companies. Do they do the KYC on their side and you guys just handle the movement? Okay. right. That's right. So we KYB them, but they handled KYC on their end. And because our transaction is only with them, that's kind of like a closed system. know, transactions are always initiated from an approved KYB partner. So that's why we don't need to KYC uh those users again. They have no interaction with us directly. And on the LP side, We have a KYT system. We don't have a KYT system, but a KYT system for our permissionless pools. So chain analysis is one of the top KYT Noreo transactions. So we do not care about identity. We care about if the transaction is legit. So we use chain analysis to monitor that. And any wallet that has been involved in a risky activity or legitimate activity is blocked from our network, transacted from our network. using that KYB system. And we also have institutional LPs and that is a KYB system as well because institutions themselves want to KYB for their own compliance reasons. Yeah. Let's talk about how Uma Finance makes money. um What does that look like? It feels like there's a couple of different ways that Uma is earning revenue. That's right. So in the simplest way, we make money every time our liquidity is used. Let's say we have $100 million in liquidity that's being used today. Any institution, any financial institution, payment institution, payment company using that liquidity pays us five to eight basis points a business day for access to capital until they pay it back. So if you think about what it accumulates to, over the course of a year. We're making double-digit yield easily over the course of a year from our liquidity pools. And that's our main business model. We are also building new solutions that are going to introduce new business models that has to do more with how we actually take a system that generates 9 % yield. that is quite stable and then make institutional grade with leverage so that the capital can earn maybe 30, 40 % yield with leverage all on chain using mechanisms called looping. And we're building what we call defensive looping. So it's a highly conservative strategy that doesn't have the challenges that the... general DeFi ecosystem has. The defaults and the looping challenges that the DeFi has mostly stems from either a mismatch in terms of the borrow rate and the supply rate. So if it becomes negative, you need to do the leverage. Or sometimes it's about how do you take care of liquidations in the primary markets versus secondary markets. Secondary markets can cause defects with things like even it's in USDE at that scale of how to actually provide primary market acquisition services. So we're those systems to create a very different institutional yield product that is leveraged, but in a very conservative way. And we believe there's going to be a major revenue driver for us as well. our core business, basically every transaction that use our liquidity, we're collecting fees on a daily basis. And then on our DeFi, LPVaults, our new innovations, all those leverage systems. As you look at any leveraged protocol, they make a lot of money from the fees. So we'll making quite a bit on those as well. Yeah, there's been a lot of talk recently about low risk DeFi, and especially from last week with a couple of DeFi projects having some liquidity issues and some contagion. What are your thoughts on, I guess, to preserve capital so that you can meet the needs of the remittance partners uh and their capital requirements, but also earn some you know, more than competitive yield on the LP side. Yeah, this is a really critical question. And this is something we have been thinking about for long time. And this is why in September, during Singapore Token 2049 on stage, we announced this defensive looping systems and what we call Project Flywheel. You have to manage, first and foremost, your liquidity in a way that you need to assume things can get really bad. You need to always assume an instance like 1010 happens, what happened on the Binance side, and people might be leaving a different venue and taking their capital with them, and that might have triggering effects for the rest of the ecosystem. So those things you should always assume can happen. You should also assume that your capital has different lifetime. Not every single capital coming in as an LP has the same lifetime. Some of them has very short time durations because this is DGNs parking their capital until they have an opportunity they want to deploy into. And some capital has very long, you know, lifetime. This is like the bank-like institutions where they actually want to park for three to five years. and secure a type of yield that they think is actually good for their portfolio. So you need to have a good mix of these. You need to understand how your mix can lead to different type of, it's like very similar bank balance sheet management type of exercise. So you need to do that exercise. And we have an expert trade-fi team that does it every single day and generates a report for the whole team. with some future predictions in terms of what the market can look like, market can look like, and how our liquidity looks like, both with incoming demand from the partners, but also potential redemption. So this is a very heavy modeling exercise, and you need to structure your capital sources accordingly. uh But also, when it comes to uh dealing with retail versus institution, uh Our goal has always been that people should have maximum flexibility in terms of their management of their own capital. should never be, know, retailers pushed to lock in for, let's say, you know, one year in any protocol because that doesn't make any sense. We're trying to create more systems that are more flexible, more free. So we are constantly looking for ways to make sure every single asset, you know, access to. is full liquid. Let's say she might close its primary market and shop today. assets still has value in the market. Assets still has value if you go to, let's say, Jupiter to swap them into USDC. You can still get your capital back. So we're building this what they call DeFi Eagles in place so that there's maximum flexibility on those LP assets. Got it. Sounds like you've built a pretty sophisticated team that knows how to manage risks, redemption requirements and all of that, which is, and I'm seeing more and more of that in crypto, which is really refreshing because I mean, we're professionalizing the industry and I think that's a good thing overall. 100%. I mean, last year, uh we decided to merge with oh our finance, is a Switzerland-based regulated uh fintech, mostly because they had a very mature, know, trade-fi uh fintech uh team. And we absorbed the whole thing because we believe that that's the way to build the next generation with mature teams. uh And we hired mainly for that as well. That's our core advantage. If you look at our whole team, 40 people, they don't look like the most crypto native teams out there, but we bring a very different mix of professionalism and maybe to a certain extent conservatism that the industry needs as well. Yeah. Okay, Erbil, two more questions before we close. um As a crypto project, most crypto projects will eventually have a token. And I don't want to talk about the token itself, but more around um the token as a way to coordinate and align incentives. um For Huma Finance, uh what can you share about that part? I think you nailed it beautifully. To me, the token is a way to align incentives in an ecosystem and also to grow the ecosystem, right? You want the token to be not an attraction for speculation purposes. You want to be an attraction for people who want to be more vested into the ecosystem. So we have designed our tokenomics. We designed it not only for one participant, but for all participants, right? So LPs. have a portion of the tokenomics that they have a say in. We have partners that are distribution partners and integration partners, but they also have a part in tokenomics and they have a say in that. And we have community ecosystem, people who are producing a lot of great material in terms of educating the industry and they should have a part in that tokenomics and in the incentive pool because we are still in very early days and people to be educated, institutions to be educated, everyone in to educated. So great content goes a long way. So all of those things are actually critical because when you're designing an ecosystem, you want to make sure that what people are bringing in. they are getting more stake in the game as they bring more and more into the ecosystem. So we designed it in a way that, let's say the more revenue you bring in as a partner, you're getting more tokens in return. It means you have more stake in the game. We designed it in a way that not just based on how much liquidity you're bringing in, but how long you're keeping that liquidity in place compared to others in the ecosystem, you're getting rewarded more because it means your long-term aligned with us, you're long term aligned with this protocol, so you should actually be a bigger beneficiary of the LP &Center reward. everything is designed so that we always reward long term alignment and we always reward the inflows, the partnership inflows, revenue inflows, because at end of the day, we think of Huma as a business, not just as a tokenized crypto project. we care first and foremost for its business to grow. And we believe as long as the business grows and the incentives are used 100 % for its business to grow, the token will eventually, first and foremost, have the right owners and shareholders, but also the value is going to be reflected in it as well. Yeah, you mentioned community. Maybe I can ask one question about that. For B2B projects, I don't like the name B2B, but it is very descriptive. um But for projects in crypto that serve other businesses and have a token, those businesses often have a hard time building a community that is primarily interested in the token. And so I guess how do you balance the you know, managing a real business that serves the needs of other businesses, but then you also have a token and how do you manage kind of the needs of token holders, which could be very different than the needs of actual businesses that you're serving. 100%. There are two ways we approach this. One is when we launched the token earlier this year, we just said, OK, we might be an institutional protocol product, quite successful, probably the leader of our domain. But will people care about it? We didn't know if people would care about it. We said, OK, let's just go out and talk about what we do and see if people care about it. And to our surprise, um people cared about it. Because right around that time, I think the conversation started shifting. People started thinking about stable coins in a different way. More and more payment institutions and payment players started talking about integrating the stable coins into their use cases. So I think the timing was also, you know, quite lucky and we have been very active participants in pushing Genius Act. was there at the White House to celebrate that signing ceremony. And I think from a timing perspective, people start to look for more real things in the ecosystem. And they're almost at the point of giving up on all this narrative-driven stuff in the altcoin ecosystems. We were lucky to be one of the very few real utilization, real-world use cases that people are connected with. But it's not easy. It's not easy because they're not our day-to-day users, right? It's very different to build an ecosystem like Pang or you have, you your whole goal is to build community and your whole product and token is a product of a community. So it's a very different thing. On the second hand, we realized there's actually lots more interest from institutions. in projects and tokens like us because they don't know how to put a value on something that's only speculative, but they know how to put a value on something that has real business uh growth underneath. So that's becoming actually a growing demand. We just had a few meetings in the past few weeks that billion dollar institutions are telling us they just want to... on more and more of our tokens. uh That's good news for us because it changes the communication challenge from how you tell the stories to the retail in terms of what you're doing to how do you basically showcase what you do for your business and just open up your whole book uh so that they can see that underlying business is actually growing faster than the value of your token. Yeah. You mentioned the White House. What was that experience like? Crazy. I first time I got an invite from the president himself in my email. It's like, it feels great to have that. uh And they only invited a very few parties. So it was extra special, to be honest. And I thought it would never happen uh after what we have gone through as an ecosystem, especially US-based uh projects were constantly told by their VCs to just leave the US, leave the US, go build in UAE, Singapore, Hong Kong, Europe. And we said, no, we're not doing anything wrong. We're doing one of the most productive platforms. And we're not touching anything that can be considered illegal or non-compliant. So we know we're doing the right things. We're just going to stay in the US. And we believe at some point, at we'll catch up to. To be very honest, like in terms that I was losing hope that that would be the case and ah it felt magical, you know, because it changed everything. It changed everything overnight. That's awesome. Yeah, I'm feeling that ah zeitgeist right now that, you know, in the US everything is just turning positive for crypto and it's really amazing. Okay, final question. Let's say everything goes as you plan in the next 12 to 24 months. What will things look like for Huma Finance then? Um. If you look at the scale of cross border transactions, if you look at the scale of trade finance, if you look at the scale of use cases like the cards and how things are shifting there, these are use cases that today worth more than 30, 40 trillion dollars of a market. And I think we're just seeing the very, very, very early stages of the adoption curve. And there's no going back because once you have more and more systems, more and more financial institutions, more partners like, know, the wisdom of the world shifting towards this, everybody else has to, right? The big players moving is a huge signal for everybody else to move. we're hearing this in Japan, in Korea, in different parts of Asia, in Middle East, in Latam, governments are moving, big institutions are moving. trade flows are moving because of the trade wars as well. it's reshifting everything. Different countries are reconfiguring how they do trade. And more and more of this is also coming on chain. um So the type of businesses we do today on chain might look small, like seven, eight billion dollars is not necessarily that big compared to the larger finance ecosystems. But I think next year we're going to start talking about trillions, not billions anymore. That's exciting. uh Erbil, thank you so much. This has been a very, very educational opportunity for me. um I loved it because it addresses a real-world problem that almost all of us have experienced that have relatives outside the US or sending money through some of these money remittance companies. um And you guys are solving it in a really unique way uh using crypto. And I love that because now crypto is not just the speculation thing, but now it's actually helpful to real human beings. And that's exciting. Thanks, Herbal, for taking the time to speak with us. I'm going to share in the show notes all about Huma Finance and all of the handles and tags so that people can follow and become part of the Huma Finance community. Thanks so much. Thank you, Peter.